Saturday, February 14, 2015

Capital Formation - Capital Investment in India during 2015-16

Telecom networks will invest $5 billion in good years and up to $3.5 to 4 billion in bad years. This is equal to Rs. 25,000 to 30,000 cr.

April 2015

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Budget Investment

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Before Budget

Budget is going to be presented in this month (February)
What should be the capital budget of Government of India?

If we assume India's GDP as $2 trillion at the end of 2013-2014 FY, we have to take as 2014-15 FY GDP as $2.2 trillion and require that 40% of it is invested during the year 2015-2016.

This gives an estimates of $880 billion as capital formation during 2015-16. One may need to refine it further. But it is a good number to use.

If we assume 20% of the investment takes place through government, we need to see around $190 billion to come from Government. What will be the shares of Central government, state governments, and local governments and what will be the contribution of public sector needs to be known to decide capital budget of Central Government. At this moment I do not have information on the break up. I shall get it in the days to come.